This is only one of the many delicate and desperate situations with which the Comptroller and the bank examiners have to deal in connection with the supervision of the banks. For every failure of a national bank that has occurred during the existence of the system a large number of associations have been saved from failure through the excellent work of the bank examiners and the intervention of the Comptroller.
The quiet and successful handling of such cases as the one described never becomes a matter of publicity, and this necessarily must be so, as publicity would defeat all efforts to straighten out a situation of this kind by creating alarm among the depositors, which would precipitate the very condition sought to be avoided. Consequently, the examiners and the Comptroller's office never receive the credit to which they are justly entitled for the effective work done in nursing banks that are in a critical condition, or on the verge of dissolution, back again into a state of healthy financial existence.
On the other hand, if the nursing remedies fail because of the incurable illness of the patient, no credit is given for the efforts made to save the life of the institution. The examiner and the Comptroller are severely criticised and censured for having permitted the patient to live so long, and the effectiveness of the system of official supervision as a whole is generally measured by the failure in a few instances to accomplish the results desired and not by the numerous successes achieved in working banks out of desperate situations.
There is about as much reason and justice in criticisms of this character as there would be in discrediting a noted surgeon as unskillful who in the course of his practice operated successfully upon ninety-nine cases and unsuccessfully upon one, or in measuring the professional reputation of a regular practitioner by the occasional case that he lost in the course of a long practice instead of by the many that he successfully treated through the remedies prescribed.
If all the excellent work that bank examiners do could be given the same degree of publicity that their failure to accomplish impossible results receives, the banking public would have a better understanding and appreciation of the merits of their work and the potency of the service which they represent.
A great deal more is expected of bank examiners now than formerly. Originally the supervision of national banks was intended to protect only the revenues of the Government from being defrauded and the general public from suffering loss through the improper use of the note issues of the banks. When the original Act was under consideration in the United States Senate, a Senator in the course of debate made the remark that the Government had no interest whatever in the depositor. It was for the depositor and stockholder to look after their own interests. The only concern of the Government, he said, was to see that the holders of the banknotes were fully protected. Now the examiner is relied upon and is expected to protect not only the interests of depositors against the defalcations of bank officers and employees and the making of false entries in the books, injudicious investments and unsafe loans, but the stockholders also have come to regard him as the guardian of their interests and depend upon him to protect them from the maladministration of the directors of their own choosing. And even the directors in some cases expect the examiner to keep them informed as to whether or not the officers of their selection are properly conducting the bank's affairs.
While examiners are required to remain in a bank long enough to satisfy themselves that they know its true condition in every detail, they are not required nor expected to make an audit, and depositors and stockholders should not expect examinations to be so thorough as to relieve the directors of their individual accountability for the proper conduct of the trust which they assume in accepting the position of director.
If bank directors were rigidly held to a strict accountability for the faithful and honest performance of the duties that devolve upon them in the management of their banks, there would not be so much necessity for dependence upon an examiner to discover during the brief period covered by his semi-annual examinations, the conditions that have been successfully concealed from those whose duty it is to be in the bank every day and to direct the management of its business.